Birmingham's civic leadership is to be revolutionised when the Government publishes "a new and ambitious blueprint" for local government - which will include the option of elected mayors.
Tony Blair said he was determined to strengthen the leadership of Britain's cities, at the Labour Party conference in Brighton.
The Birmingham Post understands the proposals will include the option of an elected mayor. They are also likely to include the possibility of a directly elected council leader and cabinet.
It follows a visit to the city earlier this month by Cabinet Minister David Miliband, who said an elected mayor could lead Birmingham into the "Champions' League" of European cities.
Ministers will be keen to ensure that new political systems are developed in consultation with local communities, rather than forcing their vision on to residents.
Mr Blair's announcement came as part of his keynote speech to the party faithful. The Prime Minister insisted Labour needed to stick to its present path and reform public services - and admitted he wished he had gone further already.
But he said he was proud of the improvements already made to Britain's major cities, highlighting the rebirth of Birmingham city centre.
The speech contained no reference to his retirement, and party aides at Brighton have hinted that he plans to stay in power for "years".
Mr Blair has announced his intention to stand down before the next election, but has not said when.
And although the Prime Minister praised Gordon Brown's handling of the economy, the speech did not contain the endorsement of Mr Brown as the next Labour leader which the Chancellor's allies may have hoped for.
Birmingham's business leaders have criticised the lack of political leadership in the city, and a recent survey of Chamber of Commerce members identified the lack of one key decision-maker or one decision-making body as a key factor holding Birmingham back.
The problem has been highlighted by dithering over the construction of a new city library, and the continued failure to secure funds to rebuild New Street station.
In his conference speech, Mr Blair said: "Next year we will address the future of local government.
"A new and ambitious blueprint strengthening the leadership of our cities, giving good councils new freedoms and giving more power to neighbourhoods."
Insisting that Labour could be proud of its record so far, he said: "Look at Britain's cities. A decade ago in decline. Today, for all the problems that remain, thriving. Waterfronts and canals renewed, business up, unemployment down, and slowly, part by part, the regeneration of the inner cities underway. Visit the centre of Birmingham. See Liverpool . .
. Or Manchester."
But he warned the nation faced new challenges, because of the advance of new technology and the development of nations such as China and India.
He said: "The character of this changing world is indifferent to tradition, unforgiving of frailty, no respecter of past reputations."
Mr Blair admitted: "Every time I've ever introduced a reform in Government, I wish in retrospect I had gone further."
But he went over his planned future policies in detail, including offering parents free childcare from 8am to 6pm, getting people on incapacity benefit into work, reforming state pensions, extending parental choice in education, and giving more power to police and councils to punish anti-social behaviour without needing to take offenders to court.
He rejected calls to withdraw troops from Iraq, saying the way to stop the innocent dying was to "stand up for their right to decide their government in the same democratic way the British people do."